Which of the following errors will normally result in overstatement of 2011 net income?

A) failure to record merchandise purchases in 2010
B) understatement of 2010 ending merchandise inventory
C) failure to record accrued salaries expense in 2010
D) overstatement of prepaid expense in 2010

Merchandise Purchases

Transactions involving the buying of goods intended for sale, usually in a retail or wholesale context.

Ending Merchandise Inventory

The value of goods available for sale at the end of an accounting period, before any year-end adjustments.

Accrued Salaries Expense

Refers to the salaries that have been incurred by the business but have not yet been paid or recorded in the financial statements.